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Shares Gift: It is your birthday and you are getting shares as a gift, so do not consider it an opportunity to grab it immediately. Our advice is that you should know the tax liability on the shares received as a gift so that this gift does not prove costly to you. If you are receiving shares as a gift from someone close to you, then know how much tax you will have to pay.
How is the tax liability on shares received as a gift?
As for tax liability on shares received as a gift, there is a law under the Income Tax Act 1961 that if you have gifted shares to your wife, husband or minor children, then the income through this will be added to your income. However, there is a relief rule that if the monetary value of the gifted shares is less than Rs 50,000, then you will not have any tax liability.
If the fair market value of the shares you have gifted is more than Rs 50,000 (50 thousand), then specifically this amount will be considered taxable and you will have to pay tax.
If you are gifting shares to close ones like parents, brothers and sisters, then these will be tax free for you. However, if your wife or husband is giving the shares as a gift, then the liability for the shares will be based on the value of the shares.
If you have inherited shares, such as through a will, your shares will be tax free and if you have received them through marriage or donation, you will not have to pay tax, but whenever these gifted shares are sold, you will be liable to pay capital gains tax.
Gifting shares is a good option
If you want to gift shares to someone, then you should not hesitate provided you know that it will not be a burden on the person giving the gift. The tax liability will either not be there, or will be so low that it is actually useful for the shares you are gifting.
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